Market Pulse
Friday, July 4, 2025
Welcome to this week’s Market Pulse, your 5-minute update on key market news and events, with takeaways and insights from the Sidekick Investment Team.
Today, we’re looking at Rachel Reeves’ job security, Vanguard’s latest fund offering, and the global impacts of Trump’s landmark legislation.
But first, our number of the week…
That’s how much money companies raised in IPOs on the London Stock Exchange in the first six months of 2025. That figure marks the slowest start to the year since 1997.
Sidekick Takeaway: While the challenges facing UK capital markets are well-documented, the issue is starting to spread to companies long considered London mainstays. Recently, AstraZeneca’s CEO has expressed a desire to move the company’s primary listing to the US, following in the footsteps of fintech giant Wise.
Before we move onto our main stories, we also wanted to ask for your feedback, to help us improve and expand our content offering. Beyond Market Pulse, we’re keen to understand more about where you get your wider financial information. Newspapers, influencers, youtube, events? We'd love to hear what you do… Below is a link to a quick 2 min survey. Your input would be hugely appreciated.
https://form.typeform.com/to/wnXlwKLr
Only have a minute to read? Here’s the TL;DR:
It’s important to note that the content of this Market Pulse is based on current public information which we consider to be reliable and accurate. It represents Sidekick’s view only and does not represent investment advice - investors should not take decisions to trade based on this information.
Amidst an evolving outlook for the UK economy, Chancellor Rachel Reeves has come under increasing pressure.
Slowing growth has already contributed to shrinking tax receipts. Under Reeves’ fiscal framework, that’s created the need for unpopular budget cuts.
But this week, the pressure on Reeves rose to new heights.
In a contentious session of Prime Minister's Questions, Keir Starmer refused to confirm whether Reeves would remain in her position until the next election.
Shortly after, Starmer attempted to walk back his answer, emphasising that Reeves would be in office through the next election and ‘many years after.’
But the damage was already done, with UK markets selling off on speculation of Reeves’ departure.
Fiscal rules may leave with Reeves
If Reeves leaves the government, the UK could be set to take a more expansionary fiscal path. That possibility immediately translated into market movements.
On Wednesday, 10-year gilt yields surged by 17 basis points, followed by a sell-off in stocks and the pound.
Notably, some of these trends reversed course following Starmer’s expression of support for Reeves.
However, the pressure continues to pile on the Chancellor.
This week, an internal report from the Office for Budget Responsibility (OBR) showed that the fiscal watchdog has a persistent optimistic bias in its economic forecasts.
That’s raised concerns that the OBR could lower its projected growth for 2025 – and thus likely require tax hikes from Reeves in the autumn.
Sidekick Takeaway: Ironically, Wednesday’s market sell-off may have bought Reeves more time, since Starmer is unlikely to want to trigger another bout of market volatility. Looking to the future, however, the Chancellor’s position appears more precarious than ever.
Investment manager Vanguard is best known as a provider of low-cost index funds.
But this week, Vanguard deviated from the firm’s classic business model with a new product – an actively managed high-yield bond fund.
That move follows the unveiling of a similar recent offering from JPMorgan, which drew a massive $2 billion anchor investment.
Vanguard’s new fund may be less unusual than it first appears. The company already has several actively managed funds in its lineup.
Still, Vanguard’s push into the space highlights an evolving shift in how investors think about the value of active management.
Passive and active: Room for both?
Both theoretical and empirical evidence point to the benefit of passive investment management – but only in certain cases.
In liquid and transparent markets where investors have ample access to information, the costs of active management may not be worth it.
But in less-efficient markets, the situation can be different. Private markets, including venture capital and private credit, are rarely passively managed.
Similarly, the Vanguard and JPMorgan funds underscore the potential value of active management in the research-intensive world of junk bonds.
This framework strongly aligns with Sidekick’s approach to portfolio management.
We believe that passive management can play a strong role in an investor's core portfolio allocation.
But we also recognize the potential advantages of active management when it comes to achieving personalised goals or investing in alternative markets.
Sidekick Takeaway: Historically, portfolio managers have categorised themselves as either passive or active investors. Asset allocators of the future, however, are likely to practice a stronger blend of the two styles.
This week, Donald Trump‘s so-called ‘Big Beautiful Bill’ was officially passed by both chambers of America’s Congress.
Now, it heads to the US President's desk, where it will almost certainly be signed into law.
The legislation mostly concerns domestic fiscal policy. The bill is notable for controversial spending cuts to healthcare and clean energy funding.
However, these cuts won’t be enough to pay for even larger tax reductions.
Independent analysis from the government’s fiscal watchdog estimates that the bill could lead America’s deficit to increase by $2.4 trillion over the next ten years.
What’s more, it could cause the US national debt as a percentage of GDP to rise by about 7 points.
Given mounting concerns about US fiscal sustainability, all this means that the Big Beautiful Bill’s impacts could spread globally.
Dollar weakness could impact global investors
In a sign that investors are beginning to grow wary of the US, the dollar has had a turbulent first half of 2025.
Compared with a basket of major currencies, the dollar has declined by about 10% so far this year, its worst start since 1973.
That decline reflects mounting concern that America’s fiscal path may no longer be sustainable.
While the dollar’s strength has complicated tradeoffs, a weak dollar can pose challenging headwinds for the global economy:
It’s far from clear whether the Big Beautiful Bill will end up having such significant knock-on effects.
But this chain of logic shows why US fiscal policy, including questions about deficit sustainability, matters for investors around the world.
Sidekick Takeaway: For decades, markets have generally been willing to overlook America’s high deficits and debt burden. The dollar’s performance this year shows that that’s no longer the case, and Trump’s landmark legislation may only add fuel to the fire.
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𝘗𝘭𝘦𝘢𝘴𝘦 𝘳𝘦𝘮𝘦𝘮𝘣𝘦𝘳, 𝘪𝘯𝘷𝘦𝘴𝘵𝘪𝘯𝘨 𝘴𝘩𝘰𝘶𝘭𝘥 𝘣𝘦 𝘷𝘪𝘦𝘸𝘦𝘥 𝘢𝘴 𝘭𝘰𝘯𝘨𝘦𝘳 𝘵𝘦𝘳𝘮. 𝘠𝘰𝘶𝘳 𝘤𝘢𝘱𝘪𝘵𝘢𝘭 𝘪𝘴 𝘢𝘵 𝘳𝘪𝘴𝘬 - 𝘵𝘩𝘦 𝘷𝘢𝘭𝘶𝘦 𝘰𝘧 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵𝘴 𝘤𝘢𝘯 𝘨𝘰 𝘶𝘱 𝘢𝘯𝘥 𝘥𝘰𝘸𝘯, 𝘢𝘯𝘥 𝘺𝘰𝘶 𝘮𝘢𝘺 𝘨𝘦𝘵 𝘣𝘢𝘤𝘬 𝘭𝘦𝘴𝘴 𝘵𝘩𝘢𝘯 𝘺𝘰𝘶 𝘱𝘶𝘵 𝘪𝘯.
